Copper Price in the 2000s

Copper began the decade cheap and unloved. The 2000 average of $0.82 per pound slipped as the dot-com bust and the shock of 9/11 sapped industrial demand, dragging the metal to $0.72 in 2001 and a low of $0.71 in 2002. At those levels copper traded near multi-decade lows in real terms, and few analysts expected the violent repricing that was about to arrive from Asia.

The turn came in 2003, when copper firmed to $0.81 as Chinese demand accelerated, then exploded higher. Prices nearly doubled to $1.30 in 2004 as the China supercycle took hold, reached $1.67 in 2005, and vaulted to a record $3.05 in 2006 on the back of China's infrastructure boom. The metal held near the top in 2007 at $3.23 and averaged $3.15 in 2008, but that annual figure masked a brutal second half. As the financial crisis broke, copper collapsed from roughly $4 to about $1.25 in a matter of months. Massive Chinese stimulus then triggered a recovery, lifting the 2009 average back to $2.34.

Copper is the leading industrial metal, nicknamed Dr. Copper for its habit of tracking the health of the global economy, and in the 2000s that pulse was set in Beijing. China's rapid urbanization and infrastructure buildout, from power grids and housing to factories and rail, made it the marginal buyer of nearly every ton of new supply. By the peak of the boom China consumed roughly half of the world's refined copper, and with mines slow to expand, the resulting squeeze pushed prices from under a dollar to above three dollars in just three years, quadrupling the metal by the 2006 record.

The same demand story explains the depth of the 2008 crash. When the financial crisis froze global trade and construction, the marginal buyer vanished and commodity funds liquidated positions, sending copper down roughly 69 percent in months. The rebound was equally telling. China's stimulus package, reported at around $586 billion, poured concrete and copper wire back into the economy, and the metal's swift recovery to a $2.34 average in 2009 confirmed that the structural China demand that had defined the decade was still intact.